Wicks Corporation began operations on January 1, 2019. At the end of 2019, Wicks reported pretax financial income of $57,500 and taxable income of $52,830, due to two temporary differences. The income tax rate is 25% for 2019 through 2021, but Congress has enacted a tax rate of 35% for 2022 and beyond. To determine its deferred taxes, Wicks prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences: 2020 2021 2022 2023 Future taxable amounts $4,700 $3,700 $4,300 $4,100 Future deductible amount (14,100) Required: 1. Prepare Wicks’s income tax journal entry at the end of 2019. Assume a valuation allowance is not required. 2. Prepare the lower portion of the 2019 income statement for Wicks.

Wicks Corporation began operations on January 1, 2019. At the end of 2019, Wicks reported pretax financial income of $57,500 and taxable income of $52,830, due to two temporary differences. The income tax rate is 25% for 2019 through 2021, but Congress has enacted a tax rate of 35% for 2022 and beyond. To determine its deferred taxes, Wicks prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences: 2020 2021 2022 2023 Future taxable amounts $4,700 $3,700 $4,300 $4,100 Future deductible amount (14,100) Required: 1. Prepare Wicks’s income tax journal entry at the end of 2019. Assume a valuation allowance is not required. 2. Prepare the lower portion of the 2019 income statement for Wicks.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 32P

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	2020	2021	2022	2023
Future taxable amounts	$4,700	$3,700	$4,300	$4,100
Future deductible amount			(14,100)

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1.	Prepare Wicks’s income tax journal entry at the end of 2019. Assume a valuation allowance is not required.
2.	Prepare the lower portion of the 2019 income statement for Wicks.